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SEGMENT INFORMATION
 9 Months Ended
Sep. 30, 2013
SEGMENT INFORMATION  
SEGMENT INFORMATION

18.  SEGMENT INFORMATION

 

We have the following three reportable segments: Banking Operations, Treasury and All Others. These segments are consistent with our internal functional reporting lines and are managed separately because each unit has different target markets, technological requirements, marketing strategies and specialized skills.

 

The Banking Operations segment includes construction and real estate development lending, commercial lending, residential mortgage lending and servicing, indirect auto lending, trust services, retail brokerage services and our retail branch offices, which provide a full range of deposit and loan products, as well as various other banking services. The Treasury segment is responsible for managing the Company’s investment securities portfolio and wholesale funding activities. The All Others segment consists of all activities not captured by the Banking Operations or Treasury segments described above and includes activities such as electronic banking, data processing and management of bank owned properties.

 

The accounting policies of the segments are consistent with the Company’s accounting policies that are described in Note 1 to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC. The majority of the Company’s net income is derived from net interest income. Accordingly, management focuses primarily on net interest income, rather than gross interest income and expense amounts, in evaluating segment profitability.

 

Intersegment net interest income (expense) was allocated to each segment based upon a funds transfer pricing process that assigns costs of funds to assets and earnings credits to liabilities based on market interest rates that reflect interest rate sensitivity and maturity characteristics. All administrative and overhead expenses are allocated to the segments at cost. Cash, investment securities, loans and leases and their related balances are allocated to the segment responsible for acquisition and maintenance of those assets. Segment assets also include all premises and equipment used directly in segment operations.

 

Segment profits (losses) and assets are provided in the following table for the periods indicated.

 

 

 

Banking

 

 

 

 

 

 

 

 

 

Operations

 

Treasury

 

All Others

 

Total

 

 

 

(Dollars in thousands)

 

Three months ended September 30, 2013:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

25,653

 

$

8,118

 

$

—

 

$

33,771

 

Intersegment net interest income (expense)

 

2,635

 

(5,547

)

2,912

 

—

 

Credit for loan and lease losses

 

3,189

 

—

 

—

 

3,189

 

Other operating income

 

10,578

 

969

 

383

 

11,930

 

Other operating expense

 

(19,615

)

(2,535

)

(14,362

)

(36,512

)

Administrative and overhead expense allocation

 

(14,018

)

(227

)

14,245

 

—

 

Income taxes

 

(1,090

)

28

 

(1,112

)

(2,174

)

Net income

 

$

7,332

 

$

806

 

$

2,066

 

$

10,204

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2012:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

23,296

 

$

6,264

 

$

—

 

$

29,560

 

Intersegment net interest income (expense)

 

5,222

 

(6,801

)

1,579

 

—

 

Credit for loan and lease losses

 

4,982

 

—

 

—

 

4,982

 

Other operating income

 

14,071

 

1,719

 

139

 

15,929

 

Other operating expense

 

(25,801

)

(494

)

(13,455

)

(39,750

)

Administrative and overhead expense allocation

 

(13,425

)

(202

)

13,627

 

—

 

Net income

 

$

8,345

 

$

486

 

$

1,890

 

$

10,721

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2013:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

75,445

 

$

22,168

 

$

—

 

$

97,613

 

Intersegment net interest income (expense)

 

9,852

 

(18,935

)

9,083

 

—

 

Credit for loan and lease losses

 

9,977

 

—

 

—

 

9,977

 

Other operating income

 

39,762

 

2,506

 

504

 

42,772

 

Other operating expense

 

(59,490

)

(3,474

)

(41,301

)

(104,265

)

Administrative and overhead expense allocation

 

(40,421

)

(654

)

41,075

 

—

 

Income taxes

 

118,628

 

331

 

(3,276

)

115,683

 

Net income

 

$

153,753

 

$

1,942

 

$

6,085

 

$

161,780

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2012:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

69,527

 

$

20,794

 

$

—

 

$

90,321

 

Intersegment net interest income (expense)

 

27,697

 

(17,769

)

(9,928

)

—

 

Credit for loan and lease losses

 

16,602

 

—

 

—

 

16,602

 

Other operating income

 

38,772

 

4,257

 

(254

)

42,775

 

Other operating expense

 

(69,322

)

(1,392

)

(43,973

)

(114,687

)

Administrative and overhead expense allocation

 

(42,950

)

(664

)

43,614

 

—

 

Net income (loss)

 

$

40,326

 

$

5,226

 

$

(10,541

)

$

35,011

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2013:

 

 

 

 

 

 

 

 

 

Investment securities

 

$

—

 

$

1,757,611

 

$

—

 

$

1,757,611

 

Loans and leases (including loans held for sale)

 

2,496,755

 

—

 

—

 

2,496,755

 

Other

 

112,442

 

303,422

 

74,253

 

490,117

 

Total assets

 

$

2,609,197

 

$

2,061,033

 

$

74,253

 

$

4,744,483

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2012:

 

 

 

 

 

 

 

 

 

Investment securities

 

$

—

 

$

1,698,593

 

$

—

 

$

1,698,593

 

Loans and leases (including loans held for sale)

 

2,242,227

 

—

 

—

 

2,242,227

 

Other

 

(7,267

)

363,815

 

73,000

 

429,548

 

Total assets

 

$

2,234,960

 

$

2,062,408

 

$

73,000

 

$

4,370,368